Advertising exec explains the decline of Safeway-Randalls
Advertising executive Bill Penczak penned a column for the Houston Business Journal last week on the decline of Randalls supermarkets.
The article doesn't necessarily cover ground that bloggers and commenters haven't already, but the argument is succinct:
Last month's announcement of the closure of 15 Randalls stores was the culmination of a slow descent of one of Houston's most cherished brands. (See "Safeway to can 15 area Randalls stores," Oct. 21.)
But the chain's demise wasn't the result of pressure from Wal-Mart (now the market leader among Houston grocery chains), nor H-E-B, nor Kroger. It was the result of mismanagement of the Randalls brand.
Randalls was the undisputed high-end leader in the 1990s. Randalls enjoyed the highest consumer preference scores for the key "perimeter" sections -- meat, produce, bakery -- that defined the customer experience. Grocery chain management teams from all over the country would visit Houston to marvel at Flagship stores that combined a bigger footprint, "wow" departments, and a profitable business model.
When Safeway bought the chain from the Onstead family in 1998 for $1.8 billion, they bought more than buildings, trucks, and aisles of Little Debbies and mandarin oranges. They bought a brand representing remarkable service and products, delivered with a unique brand personality.
In the subsequent seven years, Randalls/Safeway slid from 20 percent to 10.8 percent market share by violating the basic principals of effective marketing and branding. These include:
[snip]
[T]oday's Randalls is undifferentiated -- the death knell of a brand. Their value proposition -- great service consumers would pay more for -- had been eviscerated over time. Today's Randalls is like every other grocery store, and consumers decided the premium price was no longer worth it.
No matter how much you try to dress up and/or camouflage Safeway, it's still Safeway -- no more worth the premium price than it was the last time Safeway flopped in Houston.
PREVIOUSLY: Will Onstead put the Randall back in Randalls, Randalls shuttering 15 Houston stores, Will "lifestyle" remodel reverse decline in market share?
Posted by Kevin Whited @ 11/20/05 09:25 PM | Print |
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